The future of farming: Adapting to a changing environment
The future of farming is unknown
Farmers are set to see big changes to the farming landscape in the coming months with the UK’s impending departure from the EU fast approaching. At the time of writing this article there was still no certainty about whether we will leave with or without a deal and the Government is now looking to overhaul UK farm policy via the Agriculture Bill.
Many famers will have been following the progress of the Agriculture Bill with keen interest and will have heard the potentially troubling news that the Direct Payment scheme under the Common Agricultural Policy (CAP) is set to face radical change from 2021 with direct payments likely to be eradicated after 2027.
In times of such uncertainty it is important to make sure the fundamentals are in place so that you can rest easy knowing that the business risks and pitfalls which are under your control have all been managed. In this article, we highlight some overlooked risks business owners face:
Have you got your Lasting Power of Attorney in place?
The Partners and Directors of all businesses should take steps to put in place a Business Lasting Power of Attorney. Such a document will allow your chosen representatives to step into your business shoes should you lose mental capacity in the future. If you are personally a party to a contract, for example, it is important that your nominee can fulfil that contract (or enter into new contracts for your business) were you to not have the requisite level of mental capacity to do so in the future.
Is your will up to date?
Benjamin Franklin poignantly reminded us ‘In this world nothing can be said to be certain, except death and taxes’ and yet nearly two thirds of UK adults do not have a will.
If you run a business it is vital that you have a will in place and that you pass your business interests on to the people of your choice.
Equally, it is essential that your will gives your executors a specific power to continue to run your business immediately from the moment of your death. The absence of this power can be debilitating to your business as your business could become stagnant for several months until someone has obtained a grant of representation from the Probate Courts.
You will also want to speak with a lawyer who is experienced with the rules on the inheritance tax (IHT) exemption ‘Agricultural relief’ to make sure your affairs are structured in the most IHT friendly way possible in your will and in your business.
Why do you need “key man insurance”?
“Key man insurance” is a policy taken out by a business to insure their most valuable employees. The loss of a partner or director can cause a huge financial loss to a business. Many business owners insure against this risk and write the policies into trust for business succession planning purposes and also for IHT planning purposes.
Brachers LLP is a long established and experienced firm of solicitors who have a dedicated Agricultural team who provide legal services across our entire offering with a focus on the agricultural sector.
This article was first published in the December 2018 edition of South East Farmer.
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